21 TRADE INCENTIVES FOR BUSINESSES IN NIGERIA

Pioneer status is a 5 (five) year tax holiday granted to qualified industries anywhere in the Federation or 7 (seven) year tax holiday in respect of industries located in economically disadvantaged local government areas of the Federation.

The  grant  of  Pioneer  Status  to  a  company in  Nigeria  is  aimed  at  enabling  such company operating within the pioneer industry make significant capital expenditure and a reasonable level of return of profit within its formative years without having to pay companies tax.

Up to 120 percent of expenses on (R&D) are tax deductible. Where the research is long-term, it will be regarded as a capital expenditure and will be written off against profit.

2% tax concession for a period of five years.

Twenty percent (20%) of the cost of providing these infrastructural facilities, where they do not exist, is tax deductible.

10% tax concession for five (5) years.

A tax credit of 20% for 5 years.

(a) 20% Tax rate for first 5 years of operation

(b) Tax Free Dividend for the first five years of operation.

(c)Tax exemption on Dividends

Manufacturing Companies with turnover of less than N1 million

Manufacturing Companies in petrol chemical and liquefied natural gas sub-sector.

(a) 100 %  Capital Allowance

(b) Full tax exemption.

(c) Enhanced capital allowances of up to 50%.

(d) 100% tax-free period for 5 years

(e) 1% duty.

(f) Agricultural Credit Guarantee Scheme Fund (ACGSF) administered by the Central Bank of Nigeria (75% guarantee for all loans granted by commercial banks)

(g) Interest Drawback Program Fund (60% repayment of interest paid by those who borrow from banks under the ACGS)

All Agro and Agro Allied Companies

Agro Companies that make small or no profits

Agro-allied plant and equipment

Processors of Agricultural produce

All agricultural and agro-industrial machines and equipment

For agricultural production and processing

Cassava production and processing- provided such borrowers repay their loans on schedule.

(a) 3 to 5 years tax holiday;
(b) Low income tax of between 20% and 30%;
(c) Deferred royalty payments depending on the magnitude of the investment and the strategic nature of the project;
(d) Possible capitalization of expenditure on exploration and surveys;
(e) Extension of infrastructure such as roads and electricity to mining sites;

      (a)  Guaranteed minimum margin of USS2.50 bl;

      (b)  Accelerated capital allowances which provides that the capital allowances can be carried forward indefinitely

      (c)  Graduated royalty rates approved for oil companies.

      (d)  Investment tax allowances (ITA)

a) Manufacture/installation of telecommunications related equipment is considered as pioneer activity. As a result, they enjoy 3 to 5 years tax holiday.
b) Taxes and duties do not exceed those charged on essential electrical goods.

Tax holiday of 3 – 5 years

Power plants using gas are assessed under the company income tax act at a reduced rate of 30%.

–      Tax holiday, longer years of moratorium and import duty exemption on tourism related equipment.

–      Provision of land for tourism development at concessional rates.

–      Availability of soft loans with long period of moratorium.

3 -5 years tax holiday depending on location.

The Objective of the scheme is to significantly expand the volume of intra-community trade in the sub-region via the removal of both tariff and non-tariff barriers to trade in good originating from ECOWAS countries. This affords preferential access to the ECOWAS market from Nigeria.

·         Complete tax holiday for all Federal, State and Local Government taxes, rates, custom              duties and levies;

·         One-stop approval for all permits, operating licenses and incorporation papers;

·         Duty-free, tax-free import of raw materials for goods destined for re-export;

·         Duty-free introduction of capital goods, consumer goods, components, machinery, equipment and furniture;

·         Permission to sell 100% of manufactured, assembled or imported goods into the domestic Nigerian Market;

·         100% foreign ownership of investments;

·         100% repatriation of capital, profits and dividends; etc

Nigeria has entered into double taxation agreements with a lot of countries including UK; France; Netherlands; Belgium; Pakistan; Canada; Czech Republic; Philippines; Romania etc.

The IPPA helps to guarantee the safety of the investment of the contracting parties in the event of war, revolution, expropriation or nationalization. It also guarantees investors the transfer of interests, dividends, profits and other incomes as well as compensation for dispossession or loss. Nigeria has concluded and signed IPPAs with UK; France; Netherlands; Pakistan; Canada; Romania etc.

By virtue of Nigerian Investment Promotion Commission Act 1995 Foreigners can now own 100% shares in a Company

Under the provisions of the Foreign Exchange (Monitoring & Miscellaneous Provision Act No. 17 of 1995), foreign investors are free to repatriate their profits and dividends net of taxes through an authorized dealer in freely convertible currency.

The Nigerian Investment Promotion Commission Act guarantees that no enterprise shall be nationalized or expropriated by any government in Nigeria.